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Familiar holdups threaten omnibus; tax extenders also at risk

‘We got some sticking points on both sides,’ Shelby says

Senate Appropriations Chairman Richard C. Shelby says it’s “not impossible, but it would be difficult” to reach agreement on the 12 spending bills by Friday.
Senate Appropriations Chairman Richard C. Shelby says it’s “not impossible, but it would be difficult” to reach agreement on the 12 spending bills by Friday. (Caroline Brehman/CQ Roll Call file photo)

Funding for veterans medical care and border security remain holdups in the drive to reach agreement on a 12-bill spending package for the fiscal year that began Oct. 1.

But appropriators are making progress on conferencing the bills, with several of them close to being finished, according to sources who weren’t authorized to speak publicly. House and Senate subcommittees submitted unresolved issues to their full committee leadership Monday.   

“We got some sticking points on both sides,” Senate Appropriations Chairman Richard C. Shelby said Tuesday. The Alabama Republican added that “it would be hard, not impossible, but it would be difficult” to reach agreement on the bills by Friday.

“If we haven’t reached a deal on Dec. 9, you know what happens, we’ve got to do a [continuing resolution],” Shelby said. “I would hope if we get to that point and we’re about to close a deal, we can do like a day-to-day deal.”

There were also growing concerns that a package of tax break renewals, known as extenders in Capitol Hill parlance, won’t make the final package, according to Senate Finance Committee leaders on both sides of the aisle.

They each pointed the finger at House Republicans, though Senate Finance Chairman Charles E. Grassley, R-Iowa, said other Democrats were to blame as well.

Several people observing the progress believe another stopgap funding resolution, extending to Dec. 18, will probably be necessary. But a House Democratic aide said there are no plans for another stopgap right now.

The current temporary spending law expires Dec. 11.

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A $12.5 billion emergency spending allocation for veterans health care remains an obstacle to an overall deal, as well as Democratic opposition to President Donald Trump’s request for $2 billion for southern border wall construction. Funding to support the temporary detention of tens of thousands of people who are caught crossing the border illegally is also an issue.

Sources said House Minority Leader Kevin McCarthy reiterated his opposition to the emergency adjustment for veterans medical care this week because it would violate an agreement last year setting statutory caps on defense and nondefense spending for fiscal 2021.

McCarthy has argued that Republicans supported higher spending in the budget deal in return for Democrats’ agreeing to pay for veterans health care within the caps, unless all four congressional leaders and the White House agreed to change that.

Treasury Secretary Steven Mnuchin, the key negotiator for the White House, is also resisting the adjustment, sources said.

OMB views

In a 31-page letter to lawmakers commenting on the Senate GOP-written appropriations bills, the Office of Management and Budget did not mention the veterans medical care funding issue. But people with knowledge of the talks said that does not mean the White House supports it.

In the letter, White House budget officials spelled out their views on dozens of provisions in the Senate GOP-drafted bills. The Senate bills, however, hew much more closely to White House priorities than the House-passed appropriations bills.

One point of contention may be over whether more than 2 million federal civilian workers will get a pay increase this year. In February, the White House proposed a 1 percent raise for the federal civilian workforce in 2021, which is what the House backed in its Financial Services spending bill.

But the administration now supports a pay freeze, OMB Director Russell Vought wrote in the Monday letter to appropriators. Vought wrote that “in the context of budgetary constraints and the recent, pandemic-related impacts on non-Federal labor markets,” the administration now supports the Senate’s no-raise position.

Several observers of the process expressed doubt agreement can be reached on all 12 bills, meaning some of them would have to be funded through a stopgap that would extend spending at last year’s levels into early next year. February is being mentioned as a likely end date for another stopgap.

One source who asked for anonymity to speak candidly said disagreement over veterans health care and border enforcement could force the Homeland Security and Military Construction-VA bills into a continuing resolution.

“They will just kick the can past Trump [on those two bills] because appropriators can get deals on those issues easy. It’s the White House that’s being a pain,” this person said.

But other people close to the talks said lack of agreement on the veterans medical funding would throw the prospects of striking a deal on an omnibus into doubt. And a House Democratic aide said there is no discussion of splitting the package into an omnibus and stopgap.

Republicans are pushing strongly to reach agreement on all 12 bills, a GOP aide said, adding that it is “faulty thinking” to assume that Trump will sign anything that does not support his border security priorities.

‘Stonewalling’ tax extenders

If agreement on a spending package can be reached, it opens the door to adding COVID-19 relief provisions, extensions of expiring health care policies and possibly extensions of expiring tax cuts to the legislation. But the tax extenders appeared to be running into static.

“I think we’re moving toward good shape on health extenders and it sure looks like on the House side the Republicans are stonewalling the tax extenders,” Senate Finance ranking Democrat Ron Wyden of Oregon told reporters.

The group of 33 tax break renewals have broad support on both sides of the aisle. Provisions expiring Dec. 31 range from tax credits for energy-efficient home purchases like natural gas or propane furnaces to incentives for firms like tuna producer StarKist Co. that operate in American Samoa.

A majority of the Senate chimed in Tuesday with a desire to see at least one extender, excise tax cuts for craft alcoholic beverage makers, rolled into the “next appropriate legislative package.” In all, 57 senators signed a letter pushing for a renewal of the excise tax cuts enjoyed by small breweries, wineries and distilleries.

But Grassley said he doesn’t think tax extenders will make it into a final package because of opposition from Democrats as well as House Ways and Means Republicans.

“I’m very pessimistic because too many Democrats see this as only helping business,” the Iowa Republican said. “And with that attitude, I think it’s going to be very difficult to get it extended for a year.”

Grassley said tax extenders are also “running into opposition from Ways and Means Republicans on the grounds that these extenders are government interference in the economy.”

Aides to Ways and Means ranking member Kevin Brady, R-Texas, couldn’t immediately be reached for comment.

Jennifer Shutt and Ellyn Ferguson contributed to this report.

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